Flood insurance costs will rise for Volusia, Flagler residents

Saturday

Sep 21, 2013 at 7:49 PM

As a result of Hurricane Katrina and Superstorm Sandy, the program is now about $24 billion in debt.

By Chris Grahamchris.graham@news-jrnl.com

Property owners in Volusia and Flagler counties could be deluged with higher flood insurance premiums as part of a federal law that takes effect next month, a measure Governor Rick Scott says will “devastate parts of Florida’s real estate market.”Homebuyers, second home owners, businesses and real estate agents trying to sell homes with higher rates could be hurt the most, with increases as high as 25 percent. But almost everyone can expect at least a 5 percent increase in their flood insurance payments, insurance experts say.“These things are on the fast track to happening,” said David Thompson, an instructor for the Florida Association of Insurance Agents. “All I will say is some people in situations will see some dramatic changes.” Starting Oct. 1, the federal government will begin phasing out subsidized flood insurance policies to make the National Flood Insurance Program financially solvent, leaving homeowners and even Realtors to keep it afloat. Homes built before communities created flood maps that are in flood-prone areas most likely have subsidized flood policies. Nationally, about 5.5 million policies are carried by the National Flood Insurance Program – 1.1 million of those are subsidized, according to the Federal Emergency Management Agency. But as a result of Hurricane Katrina and Superstorm Sandy, the program is now about $24 billion in debt, Locke Burt, president of Ormond Beach’s Security First Insurance and a former state senator, wrote in an email.To cut down on the program’s debt, Congress in 2012 passed the Biggert-Waters Insurance Reform Act that extended the flood insurance program for another five years but also called for eliminating subsidies to make policies reflect true risk.“The changes ... are going to become more apparent to the average consumer as they are implemented over the next several years,” Burt wrote.In Volusia County, 1,585 flood insurance policies will be affected by the Biggert-Waters Act; 151 in Flagler County, according to the Federal Emergency Management Agency. Of that total in Volusia, 757 homes will keep subsidies until they sell or the policy lapses, while 410 non-primary residences, businesses and properties with repetitive losses will see an immediate 25 percent increase at the beginning of the month. Another 418 condominiums or multifamily residences could be affected later, but no action is planned at this time.That doesn’t even include a new 5 percent assessment to most policies to create a reserve fund in the event of catastrophic losses.Policyholders in other Florida counties will be hardest hit by the Biggert-Waters Act. FEMA estimates 50,255 policies will be affected in Pinellas County, which accounts for the most subsidized policies in the nation. Miami-Dade County isn’t far behind with 47,442 policies expected to see increases.The pending changes prompted Gov. Scott last week to send a letter to Senators Bill Nelson and Marco Rubio urging them to support a delay in the increases to “ensure that the NFIP is improved in a way that is fair for Florida’s families.”He pointed out in the letter that Florida has paid $16 billion in the National Flood Insurance Program over the last 35 years — four times the amount the state has received back in reimbursements.“This unfair consequence could devastate parts of Florida’s real estate market, stymie Florida’s economic recovery, and diminish the state’s tax base,” he said.Some are already feeling the effects of the rate increases.Mary Lynn Hastings, who has been a Realtor in the area for more than 30 years, said she’s already had sales fall through because buyers have been unable to afford the new premiums, recalling one policy that would have jumped by thousands of dollars. “The buyer walked away from the contract, they couldn’t afford it,” Hastings said.John Adams, general manager of Adams, Cameron and Co. Realtors, said his agents haven’t come across any issues, but they’re all prepared for what’s ahead.“We know it’s coming, but I don’t think many people are aware of it,” he said.But there is growing momentum toward a resolution that could prevent the hikes from taking place. Last week, the United States Senate Committee on Banking, Housing and Urban Affairs heard from Republic Senator David Vitter and Democrat Mary Landrieu, both from Louisiana, on the potential negative effects that could hit their state if the law is implemented.“It must be delayed, fixed or modified,” Landrieu said.The House did vote to hold off a portion of the Biggert-Waters Act from being implemented, but it will do nothing stop the increases many will see at the beginning of October, said Thompson of the state’s insurance agents association.Even if the Senate can agree on the House’s delay, “nothing changes and we will have this same conversation tomorrow,” Thompson said. “The sky is not falling for all 5.5 million policyholders, but yes, there will be some impact.”But Hastings worries the law’s effect could be more than this area can take as it recovers from the housing slump.“This is going to put us where we were a few years ago,” she said.

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